More buyers and investors see the value and opportunity of investing in today’s housing market.  With approximately 6.5% interest rate for a 30-year fixed mortgage and a healthy rental climate, most investors get positive cash flow after putting a 40-45% down payment.  That sounds like a lot of down payment. The good news is that with interest rate expected to drop, homeowners can refinance to reduce their monthly mortgage payment. The challenge right now is getting that property before it get snapped by another investor.  Investors shall get the pre-approval letter ready before house hunting.  They need to make a decision fast and get the contract in on time for consideration.

What is your new year resolution for 2024? Is building a real estate portfolio one of your financial objectives?

Buying real estate is particularly attractive to many investors these days. With higher capital gain expected, especially for stock investments, many investors turn to real estate for long term wealth accumulation. Real estate builds wealth through rental income and price appreciation. Investors can even delay capital gain tax using 1031 Exchange for like-kind assets. All expenses including mortgage interest, homeowner association fees, insurance, property tax, ongoing repair and maintenance costs are all deductible from rental income. With reasonable interest rate and decent down payment amount, most properties recently acquired may be able to generate decent cash flow overtime. Keep in mind that if properties are located in growing areas, rental income will increase steadily, thus expanding your cash flow.

Investing in real estate is not just for the rich. If you are making $50,000 or more, have a steady job and a reasonable credit history, you should start thinking about buying your first property. Start with a home for yourself to live instead of renting. There are loan programs available for first time homebuyers with down payment as low as 3.5% of the property value. You may qualify for VA loan with zero down payment if you are a veteran. Then save up in the next 2+ years (hopefully sooner) for down payment for your investment property. Lenders require 20-25% or more down payment for investment loans.

The Kirin Real Estate team can help you chart out a customized plan to turn your American Dream to a reality. Many of our investor buyers have been able to build their investment portfolio from zero to 2, 3 or even 4 properties in the last five years. This is not a get-rich-fast scheme. Instead the process is very systematic. It is very important to ensure that the properties are financially sustainable with good rentability and fixed mortgage payments. These investors do not flip properties which require much higher risk. Instead, the investors hold their properties for a long haul. Some keep the properties to build college fund, while others keep them to generate cash for retirement.

Feel free to contact us at info@kirinrealty.com for a private, no-risk, no-cost, consultation.

Investors select specific type of properties based on their budget, anticipated responsibilities and projected return. Let’s look at the pros and cons of each property type.

For a starter who has limited time and energy to manage the property but still wants to do it herself to gain some landlording experience, condo is a good one to start, especially for someone with a smaller budget. The responsibility is primarily limited to the condo interior. Roof, siding and landcaping are taken care of by the condo association. The major downside is the high monthly condo fee which covers the master insurance, reserved funds for building repair and maintenance as well as utilities for the common areas,

Townhouse and detached home are more expensive and require much attention inside and outside of the home. Common issues to address include roof leak, exterior wood rots and landscape maintenance. As a result the maintenance costs can be high despite the more affordable monthly HOA fee compared to condos.

Just like any investment portfolio, it is good to diversify, That applies to property type and geographic coverage in your portfolio.

Kirin Realty specializes in investment properties. We offer customized solution to meet your needs. Contact us today for a free consultation or sign up to get on our email distribution list for future educational workshops.

There are two major types of real estate investment strategies: cash-building versus equity accumulation. For investors who’d like to make quick return within a short time frame such as 3- to 6-months, cash building strategy is the way to go. There are several ways to accomplish this strategy. One way is to identify a property for sale, secure the contract and then assign it to another buyer by making a smaller margin. For investors who are interested to make a higher return, they shall buy a fixed-upper type of property at a deep discount, have the property remodeled and then sell it at the open market. Obviously there is risk involved. Investors opting this route will have to make sure they have enough capital to acquire the property and inject more fund for renovation. They must have some cash reserve to cover carrying costs while the property is being remodeled and listed on the market before transferring title to the new buyer.

For equity accumulation, investors would hold the investment property for long term; the longer the property is held, the higher the return tends to be. We have recently sold a house for a client who had bought the house back in 1945 for $5,000. The sold price of this property in this past summer was $460,000. Had the seller sold the property 10 years ago, she would have made $100,000 less. Equity accumulation strategy focuses on two main factors — ongoing cash flow and future appreciation. Investors would typically rent out the property and systematically pay down the mortgage principal to build up the equity. If the property is located in a desirable neighborhood, its market value will appreciate overtime, thus increasing the owner’s equity as well.

To learn more about these two very different investment strategies, please attend our seminar on this specific topic. You may contact us to get on our email distribution list.